As journalists filmed Mexican soldiers burning a record-breaking 300-acre (120 hectare) field of marijuana earlier this month, they learned the old lesson of these public displays: You don't actually get high from all the smoke. The plants have to be more mature and fully dried out to release their active psychedelic properties, and all the fumes waft straight up to the clouds rather than into your lungs. Consequently, soldiers in Mexico happily burn marijuana plantations in front of the cameras every week and still stay sober enough to shoot back at irate gangsters. President Felipe Calderón's war on drugs is shown on TV in clouds of green smoke.

But while the marijuana bonfires demonstrate how the Mexican government is constantly hitting drug cartels, they also illustrate how colossal Mexico's marijuana industry is. The 300-acre plantation was busted in the Baja California desert 200 miles (about 320 km) south of San Diego on July 14. Soldiers say a single harvest could yield 120 tons of cannabis, worth some $160 million. It had a sophisticated irrigation system to water plants that sprang up to 2.5 yd. (2.3 m) high alongside kitchens, bathrooms and sleeping quarters for 60 workers. Close by, in Tijuana, soldiers made a megabust in October when they seized 134 metric tons of vacuum-packed marijuana stacked in tractor trailers. That stash was so big, it filled an entire parking lot and unleashed a particularly apocalyptic-looking blaze.
(See pictures of a giant marijuana plantation in Mexico.)

These fires add heat to the simmering debate about marijuana laws raging north of the border. In November  just after the Tijuana bust  Proposition 19, an initiative to legalize marijuana, narrowly missed being approved in California. This month, as the 300-acre farm burned in Baja, petitioners were collecting signatures for a similar referendum to legalize marijuana in Colorado. In both cases, campaigners have cited the Mexican conflict as a reason to change U.S. drug laws. American ganja smokers are giving billions of dollars to psychotic Mexican drug cartels, they argue, and legalization is the only way to stop the war. It is a compelling argument. But is it true?

Drug-policy reform continues to be a highly contentious debate on both sides of the Rio Grande. Several former Latin American presidents, including Mexico's Vicente Fox and Ernesto Zedillo, support a change in policy, specifically legalization in Mexico. "We have to take all the production chain out of the hands of criminals and into the hands of producers," Fox told TIME in a recent interview. "So there are farmers that produce marijuana and manufacturers that process it and distributors that distribute it and shops that sell it." In this vision, marijuana could be a niche Mexican industry akin to tequila. However, Calderón stands firmly against legalization, saying it would make more kids get high and commit crime. "If it is legalized ... it would completely liberate the drug market and spark a reduction in price, which are factors that will drive millions of young people to consume drugs," he said in the lead-up to the California vote.
(Watch "Aerial Drug Bust at the Mexican Border.")

Politicians and pundits are equally divided about what the physical effect would be on Mexican drug cartels if Colorado or California took the plunge and legalized marijuana. A core problem is that because the trade is illegal, no one really knows how much weed Mexican farmers raise or Americans devour in smoke-filled college dorms. Back in 1997, the U.S. drug czar's office estimated Mexican marijuana yields on the basis of aerial sightings and speculated that cartels made 60% of their income  or some $20 billion annually  from cannabis. However, last year a Rand Corp. study challenged this wisdom by estimating American marijuana consumption, concluding that Mexican gangsters make only $1.1 billion to $2 billion in the green racket. The truth is that neither can be certain about the numbers.

Mexican traffickers have also morphed into criminal cartels with a broad portfolio of businesses. In addition to smuggling marijuana, cocaine, heroin and crystal meth, they make money from kidnapping, human-smuggling, running guns, stealing crude oil, product piracy, business extortion and any other devious rackets they can come up with. Legalizing marijuana would destroy only one division of their empire.
(See pictures of Culiacán, the home of Mexico's drug-trafficking industry.)

However, policy reformists point out that whatever the exact numbers, everyone agrees that Mexican gangsters are making billions of dollars selling marijuana to American smokers. "There is no doubt that marijuana legalization would hurt Mexican gangsters in their pocketbooks," says Tom Angell, spokesman for Law Enforcement Against Prohibition, a U.S. group that opposes the war on drugs. Mexico has seven major cartels involved in marijuana-growing and -smuggling. The profits of the green help them finance paramilitary death squads that have claimed 40,000 victims since 2006. Some of the violence can be directly linked to the marijuana trade. After the Tijuana bust in October, gunmen murdered 13 recovering addicts at a rehab center  one for each 10 tons of weed seized  apparently to try to make the government back off. Mexican cartels commit murder over the business precisely because it is so important to them. Legalization could take away more gangster profits than the DEA and Mexican army have managed to do in decades. It might not kill the Mexican cartels, but it would certainly hurt them.

If Colorado or California were to legalize marijuana though, there would be a legal can of worms. Federal agents could still bust marijuana dealers in those states, and the U.N. could castigate the U.S. for failing to uphold its treaty obligations to fight drugs. Policy reformists like Angell, however, argue that a yes vote in a marijuana referendum would be a first step toward a historic change in drug policy. If marijuana were sold legally in shops north of the Rio Grande, Mexican authorities would be much less eager to spark more bonfires of captured weed. "Politicians across the U.S. and in Latin America would become emboldened to change their own marijuana laws," Angell said. "It is a vote that will be heard across the world."